Supply Chain Corporate Research Articles

Business and Human Trafficking: A Social Connection and Political Responsibility Model

Human trafficking is one of the most lucrative international criminal activities and is widespread across a variety of industries. The response to human trafficking in corporate supply chains has been dominated by analyses of due diligence obligations. Existing scholarship, however, has cast doubt on the effectiveness of corporate due diligence in addressing human trafficking, because human trafficking is the outcome of macro-level social structures that are created by and consist of multiple actors, including business. The outsourcing and sub-contracting model provides incentives throughout the global supply chain to sub-contract further to reduce the cost of labor, which has led to human trafficking remaining a pervasive problem. Business responsibility for human trafficking derives from the fact that business decisions and strategies enable the conditions that allow for human trafficking to occur within their supply chains. To address human trafficking, we propose a social connection and political responsibility model, based on Iris Marion Young’s analysis of social connection and structural injustice, that is holistic, forward-looking, and outcomes-oriented. We differentiate between businesses with a strong connection to human trafficking and businesses with a weak connection, and within this distinction delineate different pathways that firms can take to meet their political responsibilities to address human trafficking. We conclude with implications for future research.

Implementation of sustainable development goals: The role for business academics

Achievement of the United Nations Sustainable Development Goals (SDGs) by 2030 is a Grand Challenge, especially for business academics who have a responsibility to work with businesses regarding their management and contributions. Two main challenges are examined in the article: the need for academics to work together towards holistic solutions to SDG problems, and the need for stronger engagement to reduce the distance between academics and practitioners/ practice. It then develops a framework that considers the knowledge-generation and application roles business academics face in addressing groups of insiders and outsiders. Finally, the use of the framework is demonstrated via a case study of modern slavery in corporate supply chains. JEL Classification: M14, Q01

Can Bad Law Do Good? A Retrospective on Conflict Minerals Regulation

Section 1502 of the Dodd Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank”) requires public companies to disclose the presence of conflict minerals in their products. Dodd-Frank as a whole has faced a barrage of criticism since its passage, and Section 1502 was not immune from intense critical backlash. As I have argued in prior scholarship and Congressional testimony, Section 1502 was ill-conceived in substance and form. Its application resulted in the improper use of securities laws to the detriment of its laudable public international law goals. This Article addresses whether, despite the structural and consequential shortcomings of the provision, it nevertheless has had positive normative effects related to consumer awareness and behavior, as well as corporate awareness and behavior. In other words, this Article considers whether the functional effects of the law have “moved the needle” in the direction of its intent, despite the provision’s potentially fatal flaws. This phenomenon begs the question of whether there is a function and purpose of “bad law.” Given that the fate of Section 1502 hangs largely in the balance, and the current administration has indicated that it will not provide funds for the implementation of Section 1502, the time is ripe for an analysis of the effectiveness of Section 1502 to date. This Article uses a retrospective lens to analyze the effect of Section 1502 on transparency within corporate supply chains, consumer behavior and awareness, and corporate social responsibility. In doing so, this Article will consider the effects that “bad law” can have in society.

Technology Focus: High Pressure/High Temperature

Technology Focus After a year, I could begin my editorial the same way I did in 2018, with the words, “The industry is slowly recovering from the worst downturn we have seen in many decades … .” But now, at least, we see some clear indications that the “HP/HT spring” is upon us, most notably the announcement by Chevron and Transocean that they will partner on construction of an ultradeepwater drillship. Because significant financial commitment is behind this agreement, we can safely say that ultradeepwater high-pressure/high-temperature (HP/HT) drilling is alive and well and that geologists see major resource potential in this environment. That said, the mantra given out at the beginning of the downturn, “Fit for 50,” by then SPE President Helge Haldorsen of Equinor, is still the benchmark many (wisely) applied for their projects—and, given the volatility of oil prices we have seen in the past year, rightly so. Therefore, and similar to last year’s HP/HT feature, we must concentrate our paper selection on technology and operating methods that make HP/HT drilling operations faster, safer, and more cost-efficient. If above-threshold drilling costs shelve a project, we can have the nicest production hardware in the world, but the project will not fly. And without projects, all HP/HT know-how and equipment quickly disappears. So, this focus is in the interest of the entire HP/HT value chain. Being able to construct wells efficiently is especially important for a technological frontier operation such as HP/HT. Industry veterans remember the enthusiasm of the 1980s for subalpine HP/HT exploration. The resource basis was there, but the failure of several wells to reach their objective (unfortunately something that happens all too often in conventional HP/HT exploration drilling) killed the potentially very important resource development that could have mitigated the decline of own-gas production in western and central Europe with all its geopolitical consequences. As the technical and commercial partnership of a drilling contractor and a major operator mentioned previously shows, frontiers of technology such as (extreme) HP/HT are best explored in the spirit (and the contractual framework) of technology partnerships, because very little of the required equipment and procedures is commodified enough to allow the corporate supply chain to decide what the most-cost-effective solution for a project may be. This is not even considering the rare and valuable innovative HP/HT know-how that only a few experts in our industry really possess and can apply, allowing the cost savings of this new level of HP/HT drilling efficiency to be realized. I hope that the papers selected will enhance the broader dissemination of this efficient HP/HT, narrow-margin well-construction knowledge and lead to a step change in HP/HT drilling-cost efficiency that is necessary in our operating environment. Interestingly, geographically, the eastern Mediterranean and Asia Pacific regions seem to be at the forefront of this development, as the selected papers show. I hope you will enjoy them and learn a lot. And, please, provide any feedback you believe to be useful to advance efficient HP/HT well-construction practices. Recommended additional reading at OnePetro: www.onepetro.org. OTC 28327 Maharaja Lela South: Innovation at Work To Push the Limits and To Deliver by Sebastien Cochet, Vallourec Asia Pacific, et al. OTC 28624 Subsea High-Pressure/ High-Temperature Technology Verification, Validation, and Regulatory Requirements: HP/HT Riser Technology Challenges by Selcuk Dincal, 2H Offshore, et al. OTC 18869 HP/HT Hands-Free Drilling Riser System With Superior Fatigue Performance by Colton Sandman, Dril-Quip, et al.

Dialectics of dissociation

In their discussion of ‘dissociation’, Ibert et al. ((2019) Geographies of dissociation: value creation, ‘dark’ places, and ‘missing’ links. Dialogues in Human Geography.) explore the negative side of branding—that is, the efforts companies take to avoid being identified with problems such as labor exploitation or environmental degradation. Because the introduction of unwanted associations into the semiotic circuit threatens the value of brands, brand owners engage in both proactive and reactive relational work to insulate brand assets from such threats. In this commentary, I explore the development of supply chain corporate social responsibility through the lens of dissociations. Civil society organizations, such as trade unions, student groups, faith-based organizations, and so on, that target brands by highlighting problems in their supply chains are engaged in a struggle over value. One way that brand owners try to counter this reputational threat is by accepting, albeit to varying degrees, the principle that they are responsible for maintaining labor or environmental standards along the supply chain. I ask whether this development signals a shift in the terrain of struggle between brands and their critics, and what such a shift might imply about the limits of dissociation as a corporate practice.

‘For the English to see’ or effective change? How supply chains are shaped by laws and regulations, and what that means for the exposure of modern slavery

'For the English to see' or effective change?-How supply chains are shaped by laws and regulations and what that means for modern slavery exposure Global supply chains cross and connect judicial systems, providing regulatory and legal frameworks in which supply chains operate. In this article we are investigating the impact of modern slavery laws and other parts of the legal framework surrounding Brazilian-UK beef and timber supply chains and how they interact with supply chain and market characteristics. We start with outlining the current challenges of modern slavery to supply chain management and then explain the history and application of current legal frameworks in which these supply chains operate. We then connect the legal frameworks to supply chain characteristics and dynamics and explain current business practices along the use of two case studies of market-leading businesses. This connection results in a discussion of the modern slavery exposure of the Brazilian-UK beef and timber supply chains. We provide detailed contextual information of the Brazilian-UK beef and timber supply chains and their commercial dynamics. The heterogeneity of these two agricultural supply chains enables a comparison and extraction of relevant factors that impact modern slavery exposure. We also portray mechanisms in place by leading corporations to prevent modern slavery and discuss the limitations of corporate supply chain policing in the context of their commercial realities.

A multi-objective optimization model for designing resilient supply chain networks

Supply chains evolve over time: they expand via planned construction and/or corporate mergers and acquisitions, and contract due to required facility closures, partnership terminations, and/or other cost-cutting decisions. In addition, businesses also operate in an uncertain world wherein network and other design decisions must be made despite the reality of unforeseen future events that can and often do disrupt or damage corporate supply chains. We present a multi-objective network design model and accompanying optimization-based decision support methodology for supply chain architects. Our methodology helps to evaluate the trade-off between total network cost minimization and maximizing overall supply chain network connectivity. Decision makers can evaluate a collection of solutions with different cost and connectivity values using our methodology and choose the network configuration that best serves the needs of their organization. Though our multi-objective network design model is applicable for individual companies looking to expand or contract their internal supply chains, we demonstrate our model's efficacy through the lens of a practically-motivated corporate merger and acquisition activity.

Network Design for Allied Supply Chains under Uncertain Conditions: A Possibilistic Programming Approach

The complex relationships between firms in today’s competitive business world affect supply chain (SC) structures so that managers have to consider SC versus SC relations instead of firm versus firm ones. In the corporate or multi-business companies, it is possible to share a number of resources between different SCs to achieve synergy and reduce costs. This paper addresses the strategic–tactical SC planning decisions (i.e., SC network design and master planning) in an uncertain environment for allied SCs belong to a single corporate. First, a fuzzy mixed-integer mathematical programming model that considers the imprecise nature of critical parameters such as cost coefficients, capacity levels, market demands is developed for integrated design of two SCs. Then, a robust possibilistic programming model is proposed to cope with the inherent uncertainty in the model parameters. The proposed model is able to achieve significant cost synergies via integrating the design of corporate SCs. Using hypothetical data inspired by an industrial case, the performance and applicability of the proposed models are investigated via experimental evaluations. Computational results indicate that our proposed model and solution approach can effectively be used to solve the allied SCs under uncertain condition.

Should Australia be Embracing the Modern Slavery Model of Regulation?

Australia is following in the footsteps of the UK and US and embracing the discourse and regulatory technologies associated with modern slavery regulation. This paper offers a critical perspective on this development. It begins with a brief account of the concept's rise to prominence, and discusses the political economy in which it is embedded. It then explores some of the advantages, as well as the pitfalls, associated with the frame, and its associated regulatory approaches, techniques and discourse. The authors raise three broad sets of concerns. The first goes to the danger of exclusively focusing on criminal justice responses to penalise and deter those who practice modern slavery while neglecting other approaches that may help address the causes of the phenomenon. The second set of concerns goes to the tendency to exaggerate the transformative potential of one of the dominant regulatory responses in this area: the mandatory corporate supply chain reporting provision. The third set of concerns relate to the implications of addressing issues of worker exploitation and mistreatment through a modern slavery and human trafficking approach rather than through other well established and newer regulatory means. To support the third argument, the authors compare the modern slavery approach with two alternate approaches: labour regulation and human rights due diligence. The authors emphasise the need for vigilance to ensure that the embracement of a modern slavery frame does not shift attention (and resources) away from more thorough and effective means of securing greater corporate accountability for labour standards in supply chains.

Voiceless but empowered farmers in corporate supply chains: Contradictory imagery and instrumental approach to empowerment

There have been calls for a shift of focus toward the political and power-laden aspects of transitioning toward socially equitable global supply chains. This article offers an empirically grounded response to these calls from a critical realist stance in the context of global food supply chains. We examine how an imaginary for sustainable farming structured around an instrumental construction of empowerment limits what is viewed as permissible, desirable, and possible in global food supply chains. We adopt a multimodal critical discourse analysis to examine the sustainable farming imaginary for smallholder farmers constructed by one large organization, Unilever, in a series of videos produced and disseminated on YouTube. We expose the underlying mechanisms of power and marginalization at work within the sustainability imaginary and show how ‘empowerment’ has the potential to create new dependencies for these farmers. We recontextualize the representations to show that while the imaginary may be commercially feasible, it is less achievable in terms of empowering smallholder farmers.

Corporate-entrepreneur collaborations to advance a circular economy

Abstract This paper examines the role of small entrepreneurial companies and their partnerships with large corporations to advance the circular economy (CE). The authors provide insights from a U.S.-based empirical study that involved 12 companies and examined the emerging drivers, current challenges and future opportunities for advancing waste repurposing and product reuse. Many large companies fail to incorporate CE principles into their business strategy due to lack of mandates, costs, logistical hurdles and inertia. This presents an opportunity for entrepreneurial companies with innovative business models to fill the gap and provide critical links for corporations in reverse supply chains while creating new business opportunities with social benefits. The study found that despite the lack of federal regulations in the U.S. a growing number of corporations are partnering with entrepreneurs to reduce waste and advance product reuse. Key drivers for such trends include sustainability commitments and zero waste goals by companies and municipalities, European Union and U.S. state mandates, reputation and the growing focus on local sourcing. Technology, knowledge, and strategic partnerships between entrepreneurs and corporations play a critical role in reducing financial costs, time, energy, environmental impacts and resources, thus helping establish viable business models. The authors propose a new framework for corporate-entrepreneur collaborations to advance a CE. The study contributes to the research on the relationship between entrepreneurial innovation and the development of CE principles within corporate supply chains, a field that is still in its infant stage.

Conflict Minerals in the Corporate Supply Chain: Is Transparency the Solution to Human Rights Violations in the Tantalum, Tin, Tungsten and Gold Supply Chains?

The European Union has recently enacted the Conflict Minerals Regulation, introducing new transparency requirements for importers of tantalum, tin, tungsten and gold from conflict-affected regions. Similar legislation has previously been enacted in the United States. The purpose of the new transparency requirements in both jurisdictions is to cut off funding for armed groups in conflict areas and thus reduce the suffering of the civil population, with particular reference to the situation in the Democratic Republic of the Congo. The criticism of the legislation centers on the costs to companies in the minerals supply chain. In this article it is argued that the costs to companies subject to the transparency requirements can be minimized with carefully crafted legislation. It is also concluded that progress in achieving the humanitarian objectives of the legislation is slower than expected, mainly due to the lack of participation in the transparency efforts by all actors in the supply chain. Successful transparency regulation has to be supported by a multitude of actors in the international community. Also, mineral supply chain transparency regulation in itself is unlikely to solve armed conflicts in resource-rich but poor countries. Such legislation only provides for one component in a multi-level approach including legislative, economic and political efforts by the international community.

Social compliance audits and multinational corporation supply chain: evidence from a study of the rituals of social audits

This study investigates the use of social compliance audits in the supply chain of multinational corporations (MNCs). Particularly, we explore the use of such audits in assessing and managing the working conditions of factory workers in the garment industry in a developing nation. Through a range of interviews with MNCs’ internal auditors, with commissioned external auditors and with representatives of the suppliers in Bangladesh, this study finds that social compliance audits become ritual strategies and are not a primary means of advancing workers’ rights. Drawing on the concept of surrogate accountability, the study suggests that to create real change in workers’ conditions and in order to hold MNCs and their suppliers accountable, some form of surrogate (government, non-governmental organisations or media) intervention is necessary. This is, we argue, preferable to leaving it in the hands of ‘markets’ and simply waiting for another major incident such as Rana Plaza to stir public concern. This study contributes to the literature by investigating how social compliance audits are undertaken by MNCs sourcing products from a developing nation, what motivations drive the adoption of such audits, and what, if anything, are the likely outcomes from the process.

The Shareholder Wealth Effects of Modern Slavery Reporting Requirements

We examine the shareholder wealth effects of the adoption of the UK Modern Slavery Act (MSA) in 2015. The MSA’s Transparency in Supply Chains clause introduced new reporting requirements mandating certain firms to provide an annual statement outlining their actions to tackle modern slavery in their business and supply chains. An event study of stock price reactions of UK firms covered by the MSA to eight events associated with its adoption provides no evidence of abnormal stock returns. We do, however, uncover significant cross-sectional differences in stock price reactions, with results suggesting that the MSA provides a competitive advantage to firms with a demonstrated track record of addressing slavery risk. By contrast, we do not find evidence of an impact of firms’ pre-regulatory Corporate Social Responsibility disclosure on stock price reactions. Our findings highlight the economic value for companies of maintaining socially responsible sourcing practices, and inform the current policy debate on the importance of greater transparency in corporate supply chains.

Shareholder Wealth Effects of Modern Slavery Regulation

We examine the shareholder wealth effects of the adoption of the UK Modern Slavery Act 2015 (MSA). The MSA’s Transparency in Supply Chains clause introduced new reporting requirements mandating certain firms to provide an annual statement outlining how they identify and mitigate modern slavery in their business and supply chain. An event study of stock price reactions of UK firms covered by the MSA to eight events associated with its adoption provides no evidence of abnormal stock returns. We do, however, uncover significant cross-sectional differences in stock price reactions, with results suggesting that the MSA provides a competitive advantage to firms with a demonstrated track record of addressing slavery risk. We find no effects for preregulatory corporate social responsibility disclosure levels on stock price reactions. Our findings highlight the economic value of maintaining socially responsible sourcing practices and inform the current policy debate on the importance of greater transparency in corporate supply chains.This paper was accepted by Gad Allon, operations management.

Interorganizational teams in low-versus high-dependence contexts

Buyer-supplier teams constitute a vital vehicle to shape and implement the corporate supply chain agenda. However, extant research on interorganizational teams is limited and more focused on new product development teams. Consequently, this paper aims to assess the impact of key interorganizational team characteristics (psychological safety and relationalism) on various facets of supplier-relationship outcomes (innovation, efficiency, and agility) as well as the moderating role of supplier dependence. Based on a sample of 413 suppliers of a focal North-American buyer of heavy machinery parts, we analyze the projected relationships through structural equation modeling and multi-group confirmatory factor analysis. We establish measurement equivalence before performing multigroup comparisons. Our results highlight the importance of both psychological safety and relationalism for improving all facets of supplier-relationship outcomes, with the exception of the impact of psychological safety on efficiency, which is not significant. Our results also confirm the moderating role of dependence; that is, the positive impact of relationalism on innovation is weakened in high-dependence relationships. The focus on suppliers to a single buyer rules out various buyer-related differences as alternative explanations. The paper provides avenues for further research and guidelines for practitioners on how to shape interorganizational teams in relation to dependence and strategic priorities.

The Environmental Liability Directive and Liability of Parent Companies for Damage Caused by Their Subsidiaries (‘Enterprise Liability’)

This article discusses whether parent companies can, and, in light of opportunities for regulatory evasion and developments in corporate group liability, should be held liable under the ELD for environmental damage caused by their subsidiaries. Depending on the facts, a parent company could qualify as an operator of its subsidiary’s activities, but an extensive application of the operator definition to parent companies could have adverse effects on corporate risk management. Parent company liability could also be viewed as a remedy for the lack of mandatory financial security, but would not appear to meet a clear need and is unlikely to be the preferred policy option. Trends in corporate liability, however, may result in broader exposure of parent companies under the ELD. Outside the realm of the ELD, current developments and new thinking on corporate groups and supply chain liability may also exercise an influence on the way courts construe the ELD or other laws applicable to environmental damage. Several trends may join forces to inspire authorities to adopt creative approaches to construing and applying the ELD. First, the concept of limited liability is being questioned, either in general or as applied to corporate groups. Theories of enterprise liability or efficient investor liability are, to varying degrees, inconsistent with limited liability. Second, under the theory of corporate social responsibility, corporations are believed to have obligations towards society and the environment beyond their legal obligations. These moral obligations could easily become legal obligations once a sufficiently egregious case presents itself. Third, under the theory of supply chain responsibility, corporations increasingly have obligations towards their suppliers, customers, and business partners. Such responsibility may ground liability if damage arises and deep pockets are required to remedy the damage.Thus, even if the ELD remains unchanged, developments in corporate group liability in general may exercise influence on the way the ELD or related laws applying to environmental damage are construed. In the hands of authorities and courts deeply concerned about the deteriorating environment, the ELD’s limited scope might prove to be a weak barrier against the incoming tide of expanded corporate and supply chain liability.

Landscape configuration is the primary driver of impacts on water quality associated with agricultural expansion

Corporations and other multinational institutions are increasingly looking to evaluate their innovation and procurement decisions over a range of environmental criteria, including impacts on ecosystem services according to the spatial configuration of activities on the landscape. We have developed a spatially explicit approach and modeled a hypothetical corporate supply chain decision representing contrasting patterns of land-use change in four regions of the globe. This illustrates the effect of introducing spatial considerations in the analysis of ecosystem services, specifically sediment retention. We explored a wide variety of contexts (Iowa, USA; Mato Grosso, Brazil; and Jiangxi and Heilongjiang in China) and these show that per-area representation of impacts based on the physical characterization of a region can be misleading. We found two- to five-fold differences in sediment export for the same amount of habitat conversion within regions characterized by similar physical traits. These differences were mainly determined by the distance between land use changes and streams. The influence of landscape configuration is so dramatic that it can override wide variation in erosion potential driven by physical factors like soil type, slope, and climate. To minimize damage to spatially-dependent ecosystem services like water purification, sustainable sourcing strategies should not assume a direct correlation between impact and area but rather allow for possible nonlinearity in impacts, especially in regions with little remaining habitat and highly variable hydrological connectivity.

Eliminating Corporate Exploitation: Examining Accountability Regimes as Means to Eradicate Forced Labor from Supply Chains

ABSTRACTThe existence of forced labor in a company’s supply chain represents the newest frontier of the global effort to eliminate forced labor. Corporations, beneficiaries of profits from products made with forced labor, represent the most nimble and most modern perpetrators of trafficking and exploitation. The negative publicity and consumer backlash that companies are facing for having forced labor in their supply chains reflects the new paradigm confronting corporate perpetrators with respect to international human rights. This article discusses four established regimes of accountability and reviews each regime’s efficacy in ensuring that corporations operate transparent, forced labor-free supply chains. The respective regimes: international regulation, market-based, civil liability, and domestic regulation, have achieved varying levels of success in recent years in an effort to make businesses accountable for ensuring forced labor-free supply chains. Analysis of accountability regimes and the successes and obstacles each regime has encountered in eliminating forced labor from corporate supply chains forcing companies to address forced labor maps progress that has occurred and also provides evaluation of what each accountability regime can provide to ensure businesses eliminate forced labor from their supply chains.

Carton-Mix Optimization for Walmart.com Distribution Centers

Walmart’s Internet shopping business has grown considerably since 2006. To effectively and efficiently serve this business model, Walmart launched distribution centers (DCs) in the United States; these DCs focus on fulfilling orders placed online at the Walmart.com website. The Carrollton, Georgia distribution center (CDC) handles a significant portion of the volume of products shipped directly to customers and stores for customer pickup. In spring 2011, the CDC executed a focused cost-improvement project to optimize its carton mix, defined as the sizes of the shipping cartons that can be erected using automation or built manually. The goals of this project were to develop a process to create an optimal mix of carton sizes to reduce shipping, material, and labor costs of conveyable orders, and improve customer satisfaction. Working in close coordination with CDC managers and Walmart’s corporate supply chain team, we developed an Excel-based solution algorithm to determine the optimal carton sizes for four automated and six manual carton sizes. Walmart has fully implemented this solution algorithm into a decision support system for reconfiguring the carton mix at the CDC. The company has certified order-fulfillment cost savings of $600,000 per year and has projected annual cost savings of $2 million across the entire Walmart.com network.